The Bank of England briefed business
leaders in Peterborough on the latest economic outlook at a seminar
organised by urban regeneration company Opportunity Peterborough.

Andrew Hauser, head of the Inflation
Report & Bulletin Division which is responsible for producing the
Bank of England's quarterly inflation report, told the meeting:

"The latest Inflation Report shows that we have an unusual situation
where tighter credit conditions are likely to slow demand but
inflation is expected to rise quite sharply in the near term.

"As food, energy and import prices
stabilise, CPI inflation should start to fall back towards the 2%
target and demand growth should begin to recover, as the effects of
lower interest rates and sterling work through.

"In setting Bank Rate, the challenge
for the MPC is to balance two conflicting risks to the medium-term
inflation outlook. On the downside, a sharper slowing in activity
would threaten to pull inflation below the target. But on the
upside, there is a risk that the short-term rise in inflation leads
to a more persistent rise in medium-term inflation expectations."

Chris Bailey, the Bank's Agent for
East Anglia and the South East of England, said: "There has been
turbulence in the financial markets, and property markets and
consumer spending has slowed. But other parts of the economy so far
continue to be in relatively good health - and the further you go
from the City of London, the healthier the economy seems to be."

Around 60 directors and senior
managers from local businesses took part in the seminar. Most of
them reported that their businesses were doing well and that the
Peterborough economy is stable or growing.

Bill Agnew, business liaison
executive with Opportunity Peterborough, said "Peterborough is not
immune to national and international influences but the majority of
local companies that we are engaged with are talking about growth
and expansion, not about recession, and we are seeing continuing
strong inward investment."

Opportunity Peterborough is
Peterborough's urban regeneration company - a private sector led
organisation backed by local, regional and national government
bodies. Its aims are to secure the growth and economic and physical
regeneration of the city.